Oil Crashes Below $50 After Production Unchanged

Any hopes of a sustained rally in the price of oil disappeared Tuesday morning as doubts were raised over an anticipated cut in production from the Organization of the Petroleum Exporting Countries (OPEC).

The oil cartel is not due to meet until June this year but a report by the Financial Times – with comments by Diezani Alison-Madueke, the Nigerian oil minister – suggested that an emergency meeting was due in the near term. This raised hopes that OPEC could cut production, something it had refused to do back at its last meeting in November 2014.

An anonymous delegate from the group denied these claims, telling Bloomberg overnight there was no emergency meeting planned. Brent crude futures dropped to 58.56 a barrel by 8:00 a.m. GMT on Tuesday and U.S. crude was back at $48.97 a barrel after climbing above $50 on Tuesday afternoon. OPEC was not immediately available for comment when contacted by CNBC.

The dramatic fall in the price of oil—which tanked as much as 60 percent from mid-June last year—has been due to weak demand, a strong dollar and booming U.S. oil production, according to the International Energy Agency (IEA). OPEC’s reluctance to cut its output has also been seen as a key reason behind the fall. The group produces about 40 percent of the world’s crude oil.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza